BBBEE Skill Development (generic)

Introduction to the Generic BBBEE codes

Companies must obtain a BBBEE level to do business with other companies or do business with the government. Current BBBEE scoring contains 25 points for skills development. Skills is a priority element. If the company does not score at least 40% of the 20 points (excluding the 5 bonus points) they will automatically drop a level on BBBEE.

Different BBBEE scorecards

There are various BBBEE scorecards applicable to different sectors. The applicable scorecard will depend on the SETA with which the company is registered, or where the main revenue stream is coming from. A company will fall either under Generic or QSE if they cannot be allocated to any other SETA.

Generic refers to companies earning above R50m turnover. QSE refers to those earning between R10m and R50m turnover.

A list of the different BBBEE scorecards is as follows:

  • Generic
  • QSE
  • ICTI Generic
  • ICTI QSE
  • Transport Generic
  • Transport QSE
  • Marketing, Advertising and Communications Generic
  • Marketing, Advertising and Communications QSE
  • Financial Generic
  • Financial QSE
  • Mining Generic
  • Mining QSE

Skills Requirements

A company cannot claim any points for skills if the following are not in place:

  • Preparation and proof of submission of workplace skills plan (WSP)
  • Preparation and proof of submission of annual training plan (ATR)
  • No mandatory training (legal required training for example health and safety) can be calculated for skills points

Black people

The code refers to black people. Black people are categorized into the following groups:

  • African
  • Indian
  • Coloured

Disabled people

The code refers to disabled people. Disabled people include those who:

  • Have a physical or mental impairment
  • This impairment is long term or recurring
  • This impairment limits their prospects of entry or advancements in employment

Skills Development points

The 25 skills development points are broken up as follows:

Skills Expenditure

8

6% of training spend

Skills Expenditure on black disabled employed people

4

0.3% of training spend

Learnerships - numbers of black people as percentage of total employees

4

2.5% of total employees

Learnerships - numbers of black unemployed people as percentage of total employees

4

2.5% of total employees

Number of black people absorbed at end of learnership (training tracking tool must be developed)

5

100% or people absorbed

25

 

 

Skills Expenditure

The company must spend 6% of leviable (skills development levy) payroll on training. This training includes the following:

  • Spend on black people
  • 85% on accredited course (Category B, C, D or E) Please see below for category explanations
  • 15% can be on non-accredited courses (other categories)
  • This 6% must also be split according to the economically active population (EAP) published by STATS SA.

For example: if a company has an annual leviable salary expense of R12m for 100 employees, they must spend R720,000 on training. This must be split 85/15 and also according to the EAP targets. The spend will be broken up as follows:

Skills Expenditure needed

Race

No. of Employees

Points available

EAP Targets

Total spend required (R)

Accredited (85%)

Non-Accredited (15%)

African Male:

27

          1.33

42.80%

        308 160

         261 936

           46 224

Indian Male:

15

          1.33

1.80%

          12 960

           11 016

              1 944

Coloured Male:

2

          1.33

5.30%

          38 160

           32 436

              5 724

African Female:

4

          1.33

35.10%

        252 720

         214 812

           37 908

Indian Female:

5

          1.33

1.00%

            7 200

              6 120

              1 080

Coloured Female:

2

          1.33

4.50%

          32 400

           27 540

              4 860

Non-Black:

45

 

9.50%

          68 400

           58 140

           10 260

Total:

100

          8.00

100%

        720 000

         612 000

         108 000

 

This will then be the maximum allowed expenditure per group, split between accredited and non- accredited training.

The leviable amount includes the following:

  • Normal salary
  • Overtime
  • Leave pays
  • Bonuses
  • Commission
  • Lump sum payment

Categories

Cat.

Narrative description

Delivery mode

Learning site

Learning achievement

A

Instruction-based theoretical instruction alone – formally assessed by the institution

Institutional instruction

Institutions such as universities and colleges, schools, ABET providers

Recognised theoretical knowledge resulting in the achievement of a degree, diploma or certificate issued by an accredited or registered formal institution of learning

B

Instruction-based theoretical instruction as well as some practical learning with an employer or in a simulated work environment – formally assessed through the institution

Mixed mode delivery with institutional instruction as well as supervised learning in an appropriate workplace or simulated work environment

Institutions such as universities and colleges, schools, ABET providers and workplace

Theoretical knowledge and workplace experience resulting in the achievement of a degree, diploma or certificate issued by an accredited or registered formal institution of learning

C

Recognised or registered structured experiential learning in the workplace that is required after the achievement of a qualification – formally assessed by a statutory occupational or professional body

Structured learning in the workplace with mentoring or coaching

Workplace

Occupational or professional knowledge and experience formally recognised through registration or licensing

D

Occupationally directed instructional and work-based Learning Programme that requires a formal contract – formally assessed by an accredited body

Institutional instruction together with structured, supervised experiential learning in the workplace

Institutions and workplace

Theoretical knowledge and workplace learning, resulting in the achievement of a South African Qualifications Authority registered qualification, a certificate or other similar occupational or professional qualification issued by an accredited or registered formal institution of learning

E

Occupationally directed instructional and work-based Learning Programme that does not require a formal contract – formally assessed by an accredited body

Structured, supervised experiential learning in the workplace which may include some institutional instruction

Workplace and some institutional as well as ABET providers

Credits awarded for registered unit standards

F

Occupationally directed informal instructional programmes

Structured information sharing or direct instruction involving workshops, seminars and conferences and short courses

Institutions, conferences and meetings

Continuing professional development, attendance certificates and credits against registered unit standards (in some instances)

G

Work-based informal programmes

Informal training

Workplace

Increased understanding of job or work context or improved

 

Example:

Company A employs 100 employees. Each employee earns R10,000 per month. Company ABC has annual salary expenses of R12 million. Company ABC must spend 6% of this on training, according to the above categories and correct race profile, in order to qualify for the maximum BBBEE skills development points.

Company A must therefore spend R720,000 on training.  This amount is the minimum that must be spent to get these 8 points for BBBEEE skills development. R612,000 must be spent on categories B to E, and R108,000 on the other categories, always bearing the EAP targets in mind.  The company must therefore first get a total listing of all training expenditure and split this into what categories it falls under. This spend must also be distributed according to race. If we split the 100 employees per race, then a table will look like the one which follows:

Skills Expenditure needed

Race

No. of Employees

Points available

EAP Targets

Total needed to spend

Accredited (85%)

Non-Accredited (15%)

African Male:

27

          1.33

42.80%

        340 508

         289 432

           51 076

Indian Male:

15

          1.33

1.80%

          14 320

           12 172

              2 148

Coloured Male:

2

          1.33

5.30%

          42 166

           35 841

              6 325

African Female:

4

          1.33

35.10%

        279 249

         237 361

           41 887

Indian Female:

5

          1.33

1.00%

            7 956

              6 762

              1 193

Coloured Female:

2

          1.33

4.50%

          35 801

           30 431

              5 370

Non-Black:

45

 

9.50%

                   -  

                    -  

                    -  

Total:

100

          8.00

100%

        720 000

         612 000

         108 000

 

Scenario A: Company A Spend on training for financial year

If company A spends approximately 50% overall on each accredited and non-accredited training, then the calculation would look as follows:

Actual Training spend

Race

Total actual spends

Accredited

Non-Accredited

African Male:

              98,770

             77,771

             20,999

Indian Male:

              87,796

             17,616

             70,180

Coloured Male:

           165,507

             89,403

             76,104

African Female:

              40,379

             23,206

             17,173

Indian Female:

           108,657

             23,746

             84,911

Coloured Female:

              51,729

                1,288

             50,441

Non-Black:

           110,852

             90,334

             20,518

Total:

           663,690

           323,364

           340,326

 

Training Spend counted by points

Race

Total actual spends

Accredited (85%)

Non- Accredited (15%)

Points

African Male:

              98 770

              77 771

              20 999

0.39

Indian Male:

              14 320

              12 172

                2 148

1.33

Coloured Male:

              42 166

              35 841

                6 325

1.33

African Female:

              40 379

              23 206

              17 173

0.19

Indian Female:

                7 956

                6 762

                1 193

1.33

Coloured Female:

                6 658

                1 288

                5 370

0.25

Non-Black:

                       -  

                       -  

                       -  

 

Total:

            210 249

           157 041

              53 208

4.83

 

The company can only earn 4.83 out of the available 8 points. The company had a good spend on “easy points”. This means on Indian males for example, they only had to spend R14,320 to get 1.33 points, which they did. It is more difficult to get points for African males, because they must spend R340,508 on African males, but they only spent R98,770 or 32% of the total.

Scenario B: Company A Spend on training for financial year

If company A spends most of its training spend on non-accredited training, then the calculation would look as follows:

Actual Training Spend

Race

Total actual spends

Accredited

Non-Accredited

African Male:

              98,770

             20,742

             78,028

Indian Male:

              87,796

                6,146

             81,650

Coloured Male:

           165,507

             11,585

           153,922

African Female:

              40,379

                9,287

             31,092

Indian Female:

           108,657

                8,693

             99,964

Coloured Female:

              51,729

                4,138

             47,591

Non-Black:

           110,852

                9,977

           100,875

Total:

           663,690

             70,568

           593,122

 

Training Spend counted by points

Race

Total actual spends

Accredited

Non-Accredited

Points

African Male:

              71 818

              20 742

              51 076

0.28

Indian Male:

                8 294

                6 146

                2 148

0.77

Coloured Male:

              17 910

              11 585

                6 325

0.57

African Female:

              40 379

                9 287

              31 092

0.19

Indian Female:

                7 956

                6 762

                1 193

1.33

Coloured Female:

                9 508

                4 138

                5 370

0.35

Non-Black:

                       -  

                       -  

                       -  

 

Total:

            155 865

              58 661

              97 205

3.50

 

The company can only earn 3.50 out of the 8 points. The company again scored “easy points” for Indian females.

Scenario C: Company A Spend on training for financial year

If company A spends most of its training spend on accredited training, then the calculation would look as follows:

Actual Training Spend

Race

Total actual spends

Accredited

Non-Accredited

African Male:

              98,770

             78,028

             20,742

Indian Male:

              87,796

             81,650

                6,146

Coloured Male:

           165,507

           153,922

             11,585

African Female:

              40,379

             31,092

                9,287

Indian Female:

           108,657

             99,964

                8,693

Coloured Female:

              51,729

             47,591

                4,138

Non-Black:

           110,852

           100,875

                9,977

Total:

           663,690

           593,122

             70,568

 

Training Spend counted by points

Race

Total actual spends

Accredited

Non-Accredited

Points

African Male:

              98 770

              78 028

              20 742

0.39

Indian Male:

              14 320

              12 172

                2 148

1.33

Coloured Male:

              42 166

              35 841

                6 325

1.33

African Female:

              40 379

              31 092

                9 287

0.19

Indian Female:

                7 956

                6 762

                1 193

1.33

Coloured Female:

              34 569

              30 431

                4 138

1.29

Non-Black:

                       -  

                       -  

                       -  

 

Total:

            238 160

           194 327

              43 833

5.87

 

The company can only earn 5.87 out if the 8 points. The company again got “easy points” for Indian females, Indian Males and Coloured males.

Skills Expenditure on black disabled employees

A company must spend 0.3% on black disabled employees. The company can get 4 points if they do this. This spend must be allocated according to the same categories as in the skills expenditure for accredited (85%) and non-accredited (15%). The skills expenditure as calculated above, can be used for this as well.

For example, if one of the African Males were disabled, then the company would be able to earn these 4 points as well. If the leviable amount is R12 million, then R36,000 must be spent on black disabled employees.

Learnerships numbers of black people as percentage of total employees

The company must register 2.5% of number of black people on learnerships as a percentage of total employees. Please note that the 2.5% is calculated according to the EAP target of South Africa and is calculated same as spend in African Male, African Female, Indian Male, Indian Female, Coloured Male, Coloured Female. In the above example of 100 employees, we must split these according to the EAP targets. This will show us the number of learnerships that must be done per race group. Remember, all calculations must be rounded up. The table looks as follows:

Race

No. of Employees

EAP Targets

 Max Allowed per group

 Allowed for learnerships

 2.5% of EAP targets

 Roundup

African Male:

27

42.80%

         42.80

              27.00

                1.07

           2.00

Indian Male:

15

1.80%

           1.80

                 1.80

                0.05

           1.00

Coloured Male:

2

5.30%

           5.30

                 2.00

                0.13

           1.00

African Female:

4

35.10%

         35.10

                 4.00

                0.88

           1.00

Indian Female:

5

1.00%

           1.00

                 1.00

                0.03

           1.00

Coloured Female:

2

4.50%

           4.50

                 2.00

                0.11

           1.00

Non-Black:

45

9.50%

           9.50

                 9.50

                     -  

 

Total:

100

100%

      100.00

              47.30

                2.26

           7.00

 

The company must thus do a total of 7 learnerships for employed learners.

Learnerships numbers of unemployed black people as percentage of total employees

The company must register 2.5% of number of unemployed black people as a percentage of total employees on learnerships. The company must basically do the same number of unemployed learners as employed learners in the same race split.
The company must also do 7 unemployed learnerships, according to the race split above.

Number of black people absorbed at end of learnership

The company must endeavor to absorb the unemployed black people on learnerships at the end of the learnership. A maximum of 5 bonus points is granted if the company absorbs the learners. These bonus points are allocated according to the percentage of unemployed black learners absorbed at the end of the Learnership.

For example: 5 unemployed learners were sponsored to complete the Learnership, just one gets absorbed upon completion. The company will earn 1 bonus point out of the maximum 5 available bonus points.

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